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A group of punters on Friday picked up second rung FMCG stocks as the perception gained ground that pricing power has returned for players in the sector.

According to market sources, HLL's announcement of price increases for some of its products marks return of pricing power. The current expectation is that more such announcements are in the offing from Henkel India, Procter & Gamble and Nirma. The range of product price rise that is being talked about in the market grapevine is handsome - between 30 and 35 per cent.

According to analysts, in view of rising demand backed by better purchasing power, margin eroding volume game in the FMCG sector is likely to be replaced soon by improved profitability.

"In the last one year or so, FMCG companies resorted to price cuts or free gifts or other marketing strategies to retain or improve market share in a highly competitive scenario", an industry insider said.

Jayanta Mallick

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